A breakthrough proved predictably elusive in the two days of nuclear negotiations between Iran and world powers that ended late Thursday in Baghdad, but it took strenuous diplomacy — and an unscheduled second day of talks — to avert a breakdown. Despite sharp differences over what each side is willing to offer in order to resolve the standoff, Iran and the P5+1 (the U.S., Britain, France, Germany, Russia and China) have agreed to hold another round of talks on June 18 and 19, this time in Moscow. That suggests that sufficient common ground has been identified to warrant continued negotiations — or, at minimum, that neither side has much appetite for the alternative to diplomacy in addressing the standoff.

“Having held in-depth discussions with our Iranian counterparts over two days — both in full plenary sessions and bilaterals — it is clear that we both want to make progress, and that there is some common ground,” said P5+1 chief negotiator and EU foreign policy chief Catherine Ashton. “However, significant differences remain. Nonetheless, we do agree on the need for further discussion to expand that common ground.”

While a new round of talks was always the expected outcome of the Baghdad meeting where the sides were required to lay out more detailed proposals for concrete, reciprocal confidence building measures and then adjourn by day’s end, Iranian officials cried foul at the proposals presented by the Western powers, and held off on agreeing to a further meeting. “The points of agreement are not yet sufficient for another round,” an anonymous Iranian official at the talks had told AFP on Wednesday.

Iran’s state media, whose upbeat spin on the talks in recent weeks had many analysts concluding that Tehran was preparing its public for a deal, slammed what it called the “outdated” and “unbalanced” proposals by the Western powers in Baghdad. The key sticking point: the question of whether Iran will be granted any relief from escalating Western sanctions if it agrees to the immediate confidence-building steps demanded by the P5+1.

Proceedings began with the P5+1 outlining its proposals, under which Iran would be required to:

Halt enrichment of uranium to 20% purity (ostensibly to fuel a medical research reactor, although Iran has already created ten years’ worth of fuel) which considerably shortens the time-span required for reprocessing into weapons-grade materiel

Ship out the stockpile of 20% material for conversion into relatively harmless fuel rods

Shut down the enrichment facility at Fordow, near Qom, which, while under IAEA monitoring, is embedded so deep in a mountainside that it may be beyond the reach of Israel’s air force

In exchange, Iran would be offered:

fuel rods for the medical research reactor as well as help with building newer ones

Assistance in raising the safety standards at Iranian nuclear facilities

An end to the embargo against supplying Iran with desperately needed parts for its decaying fleet of civilian airliners.

The P5+1 also offered to halt further efforts to tighten U.N. sanctions

Perhaps not surprisingly, the Iranians were unimpressed. An Iranian official close to the talks told the Christian Science Monitor that, while Iran is willing to compromise on 20% enrichment, it would do so only in a reciprocal process of equivalent concessions. Iran has already created its own fuel for the research reactor, so U.N. sanctions are of minimal importance. Further measures would be unlikely to pass Russian and Chinese objections —it’s the unilateral Western sanctions on banking and energy exports that concern Tehran. The Iranians complain that they’re being asked to make concessions important to the West on 20% enrichment and Fordow, but in exchange receive nothing they deem particularly important. Iran’s chief negotiator Saeed Jalili reportedly made clear during the P5+1 presentation that Iran expects an easing or suspension of some sanctions, particularly the oil embargo due to take effect in July, as its price for halting 20% enrichment. Given the history of the standoff, it’s unlikely that Tehran will embrace a deal that brings no relief from the sanctions inflicting the most pain. But Western powers have insisted they’re not about to trade away their key leverage at this stage.

U.S. officials told the Post that such steps could only be taken once Iran had come into compliance with U.N. Security Council resolutions, which would mean suspending all uranium enrichment. For Tehran, that’s a non-starter. The Iranians insist that enrichment to 3.5% is their right as a signatory to the Non-Proliferation Treaty — and having defiantly maintained that position through six years of escalating pressure, they are unlikely to back down now. Iran’s handling of the Baghdad talks suggests it has a different reading on the balance of power, and is signaling that by declining a new round of talks before the other side gives more ground. “We believe that the two parties must agree on common points to merit a new round of negotiations,” explained AFP’s Iranian source. In his view, “the Western parties want to continue these negotiations at any cost. This is not our position.”

While there’s no question that sanctions are hurting Iran’s economy and putting pressure on its regime to cut a deal, the leadership in Tehran may also be counting on economic and diplomatic pressures rising on the Western side. With both the U.S. and European economies on the brink of recession — and Europe’s intractable financial crisis considered a matter of continent-wide emergency by decision-makers — escalating tensions with Iran, and the resulting upward pressure on oil prices could worsen Western economic woes. (Global oil prices hit a nine-month low on Wednesday, precisely because talks between the two sides lessen the danger of confrontation.) And as Iran analyst Vali Nasr noted earlier this week, “confronting Iran may no longer be a European priority in the face of the region’s grave financial problems.”

The readiness of Russia and China to go along with the P5+1 process has been vital to the success of bringing Iran to the table. But Moscow and Beijing have been skeptical of the unilateral sanctions strategy adopted by the U.S. and Europe, and the Russians and Chinese will be inclined to soften sanctions in response to concrete Iranian measures to reassure the international community. “As Iran takes a step toward the global community, the world community should take steps for weaker sanctions against Iran,” said Russia’s foreign minister Sergei Lavrov in remarks quoted Wednesday in Russian media. This may help explain why Iran pushed back on the position offered by the P5+1 on Wednesday. It also casts an interesting hue on the choice of Moscow for the next round of talks — presumably at Iran’s insistence, since Western officials had told reporters on Wednesday that Geneva would be the likely venue.

Indeed, the Iranian press reported that the P5+1 was “divided” over the proposals presented on Wednesday, claiming that some delegations had actually offered the Iranians a different view. The negotiators, on Thursday, will likely find ways of sustaining the process, because that’s a shared goal. And their job, often, is finding ways of disguising concessions so that both sides can claim victory. The next key deadline is July 1, when a European embargo on Iranian oil exports is due to go into effect. Tehran’s message on Wednesday appeared to be that it will withdraw its offer to cooperate on 20% enrichment if the chokehold on its economy intensifies even while they’re doing so. That’s a proposition some in the Western camp may be willing to test, but it remains to be seen whether the P5+1 will remain unified if Iran’s response to its proposals is, ‘Yes, but…’

Tony Karon is a senior editor at TIME, where he has covered international conflicts in the Middle East, Asia, and the Balkans since 1997. A native of South Africa, he now resides with his family in Brooklyn, New York.